Fixed-term employees update
Legislation protecting fixed-term employees was introduced almost four years ago. This article reviews the legislation, including the provision limiting the use of successive fixed-term contracts, which is now beginning to have a practical effect.
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This article
examines the Fixed-term Employees (Prevention of Less Favourable Treatment)
Regulations 2002 (SI 2002/2034). The Regulations came into force on
Although the Regulations have been in force for almost four years, there has not been a deluge of reported litigation at appellate levels. A search on the EAT website1 identifies only three cases that have been heard by the EAT, one of which was subsequently overturned by the Court of Appeal. Although the paucity of reported appellate litigation does not necessarily indicate that the Regulations have been without effect, it seems likely that there will be litigation in the foreseeable future in respect of one of their provisions that has had a practical effect only from July 2006.
This is the
provision set out in reg. 8, which, in broad terms, provides that once an
employee has been continuously employed on successive fixed-term contracts for
more than four years, any renewal of the employment at the end of the most
recent fixed-term contract will be deemed to create permanent employment
status, unless the employer can justify the continued use of a fixed-term
contract. This has practical effect only from July 2006 because, for the
purpose of determining when an employee has accrued four years of continuous
service, no account is taken of service before
This is, therefore, an appropriate time to review the operation of the Regulations, and to offer some guidance on the likely impact of the restriction on the use of successive fixed-term contracts set out in reg. 8.
Key definitions in the Regulations
An understanding of the Regulations requires an appreciation of the definitions set out in reg. 1, because these determine their practical effect and application.
The Regulations afford protection to "fixed-term employees", a fixed-term employee being "an employee who is employed under a fixed-term contract". A fixed-term contract is defined as one that will terminate:
on the expiry of a specific term;
on the completion of a specific task; or
on the occurrence or non-occurrence of any other specific event other than the attainment by the employee of any normal and bona fide retiring age.
A permanent employee is defined as an employee who "is not employed under a fixed-term contract". It is notable that the Regulations apply only to those people who are engaged as employees. They do not afford protection to the broader category of persons who are protected by much employment protection legislation, namely "workers".
The definition
of a fixed-term contract (referred to in the Employment Rights Act 1996 (ERA)
as a "limited-term contract") is now somewhat broader than the definition that
existed in the unfair dismissal and redundancy legislation prior to
The Regulations apply to some crown servants, House of Lords and House of Commons staff, and police officers. They do not apply to:
members of the armed forces;
agency workers, ie individuals who have an employment contract or relationship with a temporary work agency but are placed with and do their work for a third party;
apprentices, or students on work experience placements of one year or less that they must do as part of a higher education course; or
fixed-term employees employed on training, work experience or temporary work schemes specifically designed to provide them with training or work experience to help them find work, where the scheme is wholly or partly funded by an EC institution or provided under arrangements made by the government.
One query that is often raised is whether a contract is still a fixed-term contract if it contains a provision entitling either the employer or the employee to terminate it on notice during its course. While the Regulations do not explicitly address this point, most commentators assumed that a contract would still be classified as a fixed-term contract if it contained a clause entitling either or both of the parties to terminate it on notice during its course.
This view was confirmed by the EAT decision in Allen v National Australia Group Europe Ltd. As is made clear in the judgment, the "ability of the employer, or, indeed, the employee, to bring the contract to an end at an earlier date, does not make this anything other than a fixed-term contract. For what is envisaged by the Regulations is a provision relating to the termination of the relationship 'in the normal course'."
Judge McMullen QC pointed out that contracts, and particularly those of higher paid employees, are often for a fixed term, with an earlier notice provision. Indeed, in most circumstances where an employer is entering into a fixed-term contract, the contract will have a provision allowing the employer to terminate it on notice during the course of the fixed term. If there is no such provision, and the employer terminates the contract without notice (other than on grounds of gross misconduct), the employee will be entitled to damages representing the value of salary and benefits that would have been earned during the balance of the fixed term.
For a fixed-term employee to succeed in a case alleging less favourable treatment, he or she must identify a comparable employee who is a permanent employee, employed by the same employer, and engaged in the same or broadly similar work. The fixed-term employee must show that the comparable permanent employee is based at the same establishment, unless there is no comparable employee working at that establishment. In that case, he or she can identify a comparator working at a different establishment. The comparator must, however, be employed by the same employer. It is not sufficient that the comparator is employed by a different employer that is an associated employer. A comparison cannot be made with a permanent employee whose employment has already ended (reg. 2(2)).
Less favourable treatment
Regulation 3(1) provides that a fixed-term employee has the right not to be treated less favourably than a comparable permanent employee, either as regards the terms of his or her contract or by being subjected to any other detriment or deliberate omission by the employer. The prohibition on less favourable treatment applies in particular to the opportunity to receive training or secure a permanent position, and to any service qualifications for enjoying a particular benefit (reg. 3(2)). For example, if a permanent employee is entitled to free healthcare insurance after six months' service, a fixed-term employee should not be subjected to any additional service requirement before securing that benefit.
The Regulations also provide that, in order to ensure that a fixed-term employee can exercise his or her right not to be subjected to less favourable treatment than a permanent comparator, he or she has the right to be informed about available vacancies in the business. This must be either by means of a general advertisement likely to be seen by the employee, or by reasonable notification in some other way (reg. 3(6) and (7)).
Regulation
3(3) makes it clear that the right to equal treatment is breached only if the differential
treatment is on the ground that the employee is a fixed-term employee, and it
is not justified on objective grounds. The question of identifying the grounds
for less favourable treatment arose before the EAT in (1) Coutts & Co Plc (2) Royal Bank of
The EAT rejected this argument and found in favour of the employees. As McMullen J pointed out: "The reason why the employer decided to provide no bonus to the employees was because they were members of an employee group [that] consisted of fixed-term contractors. The fact that the employer excluded other employee groups, or other business groups, is not relevant when answering the question posed. Once an employee is within the scope of a relevant anti-discrimination measure, and suffers a detriment because he or she is in that category, it is not relevant to know whether the employer discriminates against other employees who may or may not be within the scope of that or another anti-discrimination measure."
Objective justification
Regulation 3(3)(b) sets out the general principle that differential treatment as between fixed-term and permanent employees is lawful if "justified on objective grounds". Regulation 4 identifies one particular situation where objective justification is demonstrated, but without limiting the scope of reg. 3(3) (b). The Department of Trade and Industry (DTI) guidance on the Regulations2 states that less favourable treatment will be objectively justified if it is in order to achieve a legitimate objective, and is a necessary and appropriate way of achieving that objective. This test appears to derive from the established European Court of Justice test for justifying indirect sex discrimination. The DTI guidance suggests that it may be possible to justify less favourable treatment where the cost to the employer of offering a particular benefit to a fixed-term employee may be disproportionate when compared with the benefit that the employee would receive. The example is given of an employer that declines to offer a company car to a person who is engaged on a fixed-term contract of only three months, where a car would have been given to a permanent employee.
A further example relates to a situation where a particular benefit that might be provided to an employee has to be purchased in respect of a minimum period of time, for example one year. This might apply to subscriptions to a private health insurance scheme, where the employer has to pay for the insurance for one year at a time, and does not receive any rebate if the employee leaves the employment before the relevant subscription year is completed. If a fixed-term employee is to be engaged on a contract that is to last appreciably less than one year, the employer might be objectively justified in refusing to purchase the insurance cover for that employee.
The Regulations also deal with situations where the employer provides a benefit, such as a bonus, at certain intervals of time, for example annually. The pro rata principle provides that the fixed-term employee should ordinarily receive such proportion of the pay or benefit as is reasonable having regard to the length of his or her contract of employment (reg. 3(5)). For example, if an employer pays employees a bonus every Christmas and the bonus represents 10% of the salary earned in the 12-month period ending on 31 December, this could mean that an employee who was engaged on a six-month fixed-term contract from 1 July until 31 December that year should receive a bonus representing 10% of what he or she earned during that six-month period. It is also likely to mean that if the employee was employed for a different period, for example from 1 January to 30 June, he or she would be entitled to an appropriate pro rata bonus, even though not still employed at Christmas when the bonus is paid. This may call into question the legitimacy of provisions, often seen in bonus schemes, that stipulate that employees will lose any entitlement to a bonus if their employment ends before the payment date, insofar as they discriminate against fixed-term employees.
Regulation 4 provides that objective justification is demonstrated where, on an overall comparison of the terms of employment of the two different employees, the terms of the fixed-term employee are at least as favourable as those of the comparable permanent employee. This means that an employer might deny certain benefits to a fixed-term employee, but make good that shortfall by, for example, giving the fixed-term employee a higher basic salary. It is not altogether clear how this comparison of the overall value of the contractual terms is to be made, although the DTI guidance suggests that the value of benefits should be assessed on the basis of their "objective monetary worth rather than the value that the employer or employee perceives them to have".
This concept of "objective worth" is somewhat problematic in a theoretical sense, since it is generally accepted that the worth of any particular commodity or service is determined by reference to how much someone is prepared to pay for it. Moreover, some contractual benefits and entitlements are not readily capable of having a financial value placed on them. Suppose, for example, the employer provides that fixed-term employees can select their holiday dates only after the preferences of permanent employees have been taken into account. It is difficult to see what additional benefit, such as a cash payment, would be required to offset this disadvantage.
One problematic issue concerns the relationship between reg. 4 (permitting an overall comparison of contracts approach) and reg. 3(3)(b) (the broad test of objective justification). Suppose, for example, an employer wishes to exclude from the benefit of private health insurance an employee who is on a fixed-term contract for only three months, on the basis that it would still have to pay the premiums for the full 12-month period. Would the employer, in order to justify excluding the employee from that benefit, be required to provide some compensatory benefit, such as a modest augmentation of the employee's salary? Clearly if the employer chose to do that, it would be in a much stronger position to demonstrate objective justification by reference to the test in reg. 4 (comparison of overall terms of employment).
However, it appears that the Regulations do not necessarily require the employer to provide compensatory benefits in situations where it is objectively justified in excluding the employee from the benefit in question. This is because the provisions of reg. 4 are expressed to be without prejudice to the test of objective justification in reg. 3(3)(b). However, a prudent employer might wish to offer some cash compensation to the fixed-term employee in these circumstances, not least because if the three-month contract is subsequently extended so that it lasts for one year or more, it might make it particularly difficult for the employer then to justify excluding the employee from the health insurance benefit.
Dismissal
Although the Regulations do not explicitly deal with dismissal (except where dismissal is in the form of victimisation for asserting rights under the Regulations, which is dealt with in Assertion of rights, below ), a number of matters that arise in the context of the dismissal of fixed-term employees warrant separate discussion.
One key issue
arose before the Court of Appeal in Department for
Work and Pensions v Webley. Here, the
employee was employed in a jobcentre, on a series of short fixed-term contracts
from
The employee noted that, at the time her employment ended, the jobcentre was taking on other new employees on temporary employment contracts. The employer had a policy that contracts for temporary employees should be terminated after 51 weeks' service, thereby preventing them from securing unfair dismissal rights. Mrs Webley argued that, in the application of that policy to her, she had been treated less favourably than a permanent employee within the meaning of reg. 3(1) (b). The Court of Appeal rejected her argument, and found in favour of the employer, concluding that there was no breach of the relevant provision of reg. 3. Wall LJ stated that, once it was accepted that fixed-term contracts are not only lawful, but also recognised by Directive 99/70/EC as responding in certain circumstances to the needs of both employers and workers, it follows necessarily that the termination of a fixed-term contract by the simple passing of time cannot itself constitute less favourable treatment in comparison with a permanent employee. It is the intrinsic nature of a fixed-term contract that it ends after a fixed period.
Of course, this case deals with only one type of situation relating to the ending of fixed-term contracts: the question of whether or not there is a breach of the Regulations simply by reason of the fact that a fixed-term contract comes to an end and is not renewed. The Court held that there was no breach of the Regulations in such circumstances.
However, under ss.95(1)(b) and 136(1)(b) of the ERA, for the purpose of unfair dismissal and statutory redundancy payments, "dismissal" is defined in such a way as to include the expiry and non-renewal of a fixed-term contract. Ordinarily, the right to claim unfair dismissal arises only when the employee has a year's continuous service, and a right to a statutory redundancy payment where the employee has two years' continuous service. As an employee with at least a year's continuous service is entitled to claim unfair dismissal, employers need to take particular care before allowing a fixed-term contract to expire by the passage of time, the completion of a task or the occurrence of a specific event.
The mere fact that the employer may be able to mount the argument that the employee knew from the outset that the employment was going to end at a particular point will not, in itself, provide a successful defence to an unfair dismissal claim. If the employee challenges the fairness of the dismissal, the employer will need to show that there was a fair reason of the type identified in s.98 of the ERA, such as poor performance, misconduct, redundancy or some other substantial reason. In many circumstances where a person is engaged on a fixed-term contract, it is because the employer has a need for the job to be filled for only a limited time or for carrying out a particular task. In such circumstances, the potentially fair reason for dismissal will generally be redundancy.
However, it is
important to emphasise that this merely provides a potentially fair reason for
dismissal, and does not, of itself, mean that the dismissal is necessarily
fair. Not only does the employer need to show fairness by reference to the
well-established principles, but it also needs to ensure compliance with the
statutory dismissal procedure under the Employment Act 2002, which came into
force on
For many employers, the administrative burden of complying with this statutory dismissal procedure, particularly in circumstances where several fixed-term contracts are to expire at the same time, means that in many cases they probably fall short of ensuring full compliance. Employers should be aware that if they are dismissing as redundant 20 or more employees in a 90-day period, there is no obligation to comply with the statutory dismissal procedure. There is, however, a duty to comply with the obligation to inform and consult recognised unions or other representatives under s. 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A). Nevertheless, where s. 188 of TULR(C)A does not apply, while there might appear to be some artificiality in writing to an employee stating an intention to dismiss, where the dismissal consists of the expiry of the contract, it is still necessary for the employer to do so in order to ensure compliance with the statutory dismissal procedure.
Furthermore, while Webley dealt with the applicability of the Regulations in circumstances where the contract expires by reason of the ending of its fixed term, the employer needs to be more cautious in circumstances where it expressly dismisses fixed-term employees during the course of the fixed term. For example, a situation might exist where an employer needs to make four redundancies out of a group of 20 employees, and in that group there are four employees engaged on fixed-term contracts all due to expire in six months, but terminable by the employer on two weeks' notice at any point. The employer may not wish to place any of its permanent employees at risk of redundancy, and may therefore simply decide to dismiss the four fixed-term employees by reason of redundancy.
Any decision by the employer to dismiss those four employees, prior to the expiry of the fixed term, will render it open to challenge under reg. 3, regardless of their length of service, as a breach of the equal treatment principle. In essence, fixed-term employees should not necessarily be "first for the chop" when it comes to redundancy selection, just in the way that part-time employees should not be selected because they are part time. Even if the employer decided to postpone the redundancies until the date when the fixed-term contracts expired six months later (therefore, following Webley, avoiding any challenge under the Regulations) such dismissals might be held to be unfair under general unfair dismissal principles, if the employees met the one-year service requirement.
As mentioned above, the expiry of a group of fixed-term contracts at around the same time can trigger the duty to inform and consult collectively as detailed in s.188 of TULR(C)A. This will often be the case where the employees are doing seasonal work, for example in the tourism sector, or providing teaching in educational establishments such as colleges or universities. A failure to comply with the s. 188 duty can lead to substantial awards against employers, and the apparent futility of the consultation will not necessarily lead to a reduction in the award (Susie Radin Ltd v GMB and others).
Written statement
Regulation 5 provides that if a fixed-term employee considers that he or she is being treated less favourably than a comparable permanent employee, the employee can request a written statement of the reasons for the treatment from the employer. The employer should provide the written statement within 21 days of the request. Any failure to provide a written statement, or the provision of one that is evasive or equivocal, can allow a tribunal to draw an inference that there has been a breach of reg. 3.
Of course, an employer may well respond to a request under reg. 5 by explaining that there is in fact no differential treatment of the type alleged by the employee, or that any differential treatment is objectively justified. Alternatively, the employer might acknowledge that there has been a breach of reg. 3, and state an intention to make good that breach.
The Regulations contain provisions entitling an employee not to be dismissed or subjected to a detriment on account of asserting rights under the Regulations (reg. 6). Asserting these rights includes:
bringing proceedings against the employer;
requesting a written statement from the employer about reasons for less favourable treatment;
assisting someone else in bringing proceedings against the employer;
refusing to forego rights under the Regulations;
declining to sign a workforce agreement; and
being a representative of the workforce or a candidate for election.
These provisions are standard in employment protection legislation and are designed to ensure that employers do not victimise employees for claiming their rights under the Regulations, as long as the employee was acting in good faith.
The normal remedy for a breach of the Regulations is for the employee to bring a complaint before the employment tribunal. If the complaint is upheld, the tribunal can make a declaration of the rights of the complainant and the employer, order the employer to pay compensation, and/or recommend that the employer take action to obviate or reduce the effect of the unlawful treatment. The tribunal will take such of those steps as it considers just and equitable (reg. 7(7)). In calculating compensation the tribunal must have regard to the infringement to which the complaint relates and any loss caused by the infringement. However, compensation does not include compensation for injury to feelings (reg. 7(10)).
In a typical case involving a complaint about less favourable contractual terms, compensation is likely to consist of a sum representing the value of any benefit that has been unlawfully denied to the fixed-term employee. In a dismissal case, where a fixed-term employee is expressly dismissed, and the reason for the dismissal is his or her fixed-term status or that the employee has asserted his or her rights, then it is assumed that compensation would be assessed in accordance with the principles that inform the assessment of compensation for unfair dismissal.
A claim alleging dismissal or subjection to a detriment on account of fixed-term status, contrary to the Regulations, can be brought by an employee regardless of his or her length of service. This is in contrast to a standard claim for unfair dismissal, which requires the employee to have 12 months' continuous service.
Successive fixed-term contracts
While the
Regulations have been in force for almost four years, it was only from July
2006 that the practical effect of reg. 8, which seeks to limit the use of
successive fixed-term contracts, came to be felt. In broad terms, reg. 8
provides that if an employee has been employed on successive fixed-term
contracts for a period of four years or more, if the employee is offered a
renewal of the contract, that renewal will be deemed to be on a permanent
basis, unless the employer has objective reasons for a further fixed-term
contract. For the purpose of determining when the employee has reached four
years' continuous service, any service before
The following
example illustrates how this works in practice. Employee A began employment
with his employer on
Some
commentaries on reg. 8 have been to the effect that once an employee reaches
four years of continuous service on successive fixed-term contracts, the
employment is automatically deemed to be permanent from the four-year point. It
is suggested that this analysis is incorrect, and that permanent status can be
obtained only when the contract is renewed, or the employee is engaged on a new
fixed-term contract, when he or she already has, at the date of the
renewal/re-engagement, a period of four years or more of continuous employment.
Therefore, in the example set out above, employee A does not automatically
become permanent on
It is important for employers to be aware of how continuous employment is calculated. Regulation 8(4) provides that continuous employment is determined in the manner set out in the ERA, which is the test to be applied in ascertaining length of continuous service for the purpose of other statutory rights, such as unfair dismissal and redundancy payments. The relevant provisions of the ERA provide that continuity of employment can be maintained in a number of circumstances where there is in fact no contract of employment between the employer and employee during any particular week. For example, continuity is maintained in circumstances where there is no contract on account of there being a "temporary cessation of work" (s.212(3)(b) of the ERA). This would apply in many circumstances where the employer's requirements for the work that the employee is engaged to carry out fluctuate during different parts of the year.
For example,
in the education sector it is quite common for employers to engage on
fixed-term contracts those lecturers or teachers who are required to carry out
only teaching, and not other duties such as research or course development.
Typically, a college might engage a lecturer under a contract that lasts from 1
September until 30 June for a particular academic year. The contract ends at
the end of June and there is no contract in place during July or August. If the
employee is subsequently re-engaged in September, the break during July and
August will ordinarily be regarded as being on account of a "temporary
cessation of work". Continuity of employment will therefore be maintained, and
the period of continuous employment includes the period of the summer break.
When this employee has secured four years of continuous service since
It seems clear that it would become permanent, unless the employer can demonstrate that there is objective justification for a further fixed-term contract. This matter is likely to assume particular importance for universities and colleges from autumn 2006 in respect of those lecturers who have been employed on successive fixed-term contracts since the summer or autumn of 2002.
This raises a key issue under the Regulations: the scope of the defence of objective justification for continued fixed-term status, set out in reg. 8(2)(b). An employer might seek to argue that it is justified in not engaging an employee on a permanent contract, on account of the fact that it requires the services of the employee for only part of the calendar year, and has no need for him or her during the summer vacation. The employer would want to argue that reg. 8 should not be interpreted in such a way as to require it to employ someone during a period of time when it has no need for the individual's services. It is difficult to assess if such an argument is likely to succeed. However, in developing an objective justification defence, the employer may need to show that the advantages that it secures in engaging the employee on a fixed-term contract, as opposed to a permanent contract, are sufficiently compelling to outweigh the disadvantage that the employee suffers through not securing permanent status.
One difficulty for the employer in this regard might be the fact that having to engage an employee on a permanent contract does not necessarily increase the costs of employing him or her. Even if the employer is required to employ the employee on a permanent contract, this does not, of itself, require the employer to pay the employee anything during the summer vacation period when he or she is doing no work. Assuming that the contract is one under which the employee is paid by reference to the number of hours of teaching and other duties that he or she actually carries out, and the employer assigns no work to him or her during the summer vacation, the employee would not be entitled to any payment in respect of that period of time. On this analysis, the employer might find it difficult to demonstrate that the benefits that it gains through employing the employee on a fixed-term contract are sufficiently great to justify the continued fixed-term status.
Employers may actually find that they derive certain benefits where employees are engaged on permanent contracts. If large numbers of lecturers are dismissed at the end of each summer term, and then re-engaged in the autumn term, this results in certain legal difficulties for the employer. Ordinarily, the dismissals are on such a scale as to trigger the obligation to inform and consult collectively under s.188 of TULR(C)A. If there are to be fewer than 20 dismissals over a 90-day period, the employer is required to follow the statutory dismissal procedure for each employee whose contract expires, which could be an appreciable burden. Moreover, the dismissals could also trigger a right to claim unfair dismissal and statutory redundancy payments. These challenges would be avoided if the employer engaged the employees on continuous permanent contracts. If it did not need them during the following academic year, the employees could be expressly dismissed.
In practical
terms, employers that renew or extend fixed-term contracts after
Regulation 8(5) provides that the application of reg. 8 can be modified by way of a collective or workforce agreement. Such an agreement might specify:
the maximum total period for which employees may be continuously employed on successive fixed-term contracts;
the maximum number of successive fixed-term contracts or renewals; and/or
objective grounds justifying the continuation of fixed-term status.
This provision might be especially useful where there is uncertainty as to whether a particular reason for fixed-term status meets the test of objective justification. For example, where the employer's need for employees fluctuates between different times of the year, a workforce agreement might specify that fixed-term status is justified in circumstances where there is a particular period of time during which the employer has no need for the employee to carry out work of the type that he or she is doing. This could afford some certainty to both the employer and the employee regarding the employee's status during the period - which could perhaps be several months long - when he or she is doing no work for the employer and receiving no pay from the employer.
If the effect of the Regulations is that permanent status is automatically afforded to an employee, although there may be no obligation on the employee to work, and no duty on the employer to pay the employee, during the period when he or she is not required to do any work, some questions regarding the rights and obligations of the employee during this period are raised. For example, would the employee be entitled to take up other work with another employer during the summer vacation, without being in breach of any of his or her implied duties? The answer is probably yes, but employers would be wise to deal expressly with the point. A further question is whether or not the employee would be entitled to sign on to receive state benefits during his or her summer vacation, if the employment contract had not terminated. Finally, the employer would need to consider whether, and if so how, the right to paid holiday arises in respect of the periods of no work and no pay. It is likely that holiday entitlement would arise, and employers would need to take account of this when drafting contracts and allocating holiday entitlement and pay.
In terms of the conversion from fixed-term to permanent status, reg. 9 provides that if an employee considers that he or she has assumed permanent status because of the operation of reg. 8, the employee can write to the employer requesting a written statement confirming that his or her contract is no longer a fixed-term contract. The employer must reply within 21 days, either to confirm that the employee is permanent or to give reasons why the contract continues to be fixed term. If the employer is asserting that there is an objective justification for continued fixed-term status, it must set this out.
Summary
It is difficult to evaluate the extent of the practical impact of the Regulations so far. The fact that there is little reported appellate litigation does not indicate much about the practical impact of the Regulations. What does appear to be clear is that many of the practices that some employers routinely operate are of questionable legitimacy in terms of the way in which fixed-term employees are treated. It is not simply a question of whether the Regulations themselves have been breached, but whether the manner in which the employee has been treated constitutes a breach of other applicable legislation, including the laws relating to unfair dismissal, statutory redundancy payments and the obligation to inform and consult over collective redundancies.
It would appear that many employers operate on the assumption that, because a fixed-term employee knew at the outset that his or her contract was going to come to an end at a particular point, they are not under any real duty to consult about this, or to take steps to find other employment for the employee if there is a redundancy situation. However, because of the delayed impact of reg. 8, which can afford an employee permanent status after a contract has been renewed, the practical effect of the Regulations might be felt rather more in the future.
Even if an employee does secure permanent status through the operation of reg. 8, this may make little practical difference in some respects. When an employee has at least one year of continuous service on a fixed-term contract, he or she is entitled to claim unfair dismissal on the expiry and non-renewal of that contract, in just the same way that he or she would have been entitled to claim unfair dismissal had the employer expressly terminated a permanent contract. Therefore, the operation of the four-year rule does not afford employees an opportunity to claim unfair dismissal that they would not otherwise have had. Rather, it means that they will feel a measure of security inherent in having a contract that is not time or task limited.
1www.employmentappeals.gov.uk.
2Fixed-term work: guidance (URN 06/535) (www.dti.gov.uk/employment/employment-legislation/employment-guidance/page18475.html ).
This feature was contributed by Geoffrey Mead, an
employment law partner at Eversheds,
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Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034) 8 Successive fixed-term contracts (1) This regulation applies where - (a) an employee is employed under a contract purporting to be a fixed-term contract, and (b) the contract mentioned in sub-paragraph (a) has previously been renewed, or the employee has previously been employed on a fixed-term contract before the start of the contract mentioned in sub-paragraph (a). (2) Where this regulation applies then, with effect from the date specified in paragraph (3), the provision of the contract mentioned in paragraph (1 )(a) that restricts the duration of the contract shall be of no effect, and the employee shall be a permanent employee, if - (a) the employee has been continuously employed under the contract mentioned in paragraph (1 )(a), or under that contract taken with a previous fixed-term contract, for a period of four years or more, and (b) the employment of the employee under a fixed-term contract was not justified on objective grounds - (i) where the contract mentioned in paragraph (1 )(a) has been renewed, at the time when it was last renewed; (ii) where that contract has not been renewed, at the time when it was entered into. (3) The date referred to in paragraph (2) is whichever is the later of - (a) the date on which the contract mentioned in paragraph (1)(a) was entered into or last renewed, and (b) the date on which the employee acquired four years' continuous employment. (4) For the purposes of this regulation Chapter 1 of Part 14 of the
1996 Act shall apply in determining whether an employee has been continuously
employed, and any period of continuous employment falling before |
CASE LIST
Allen v National Australia Group Europe
Ltd [2004] IRLR 847
(1) Coutts & Co Plc (2) Royal Bank of
Department for Work and Pensions v Webley
[2005] IRLR 288
Susie Radin Ltd v GMB and others [2004] IRLR
400
